A Royal Bank of Canada sign in downtown Toronto.Reuters
Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day.
CIBC World Markets analyst Robert Sedran is switching up his recommendations on a couple of the Canadian banks in the wake of their latest earnings season, now suggesting investors buy Bank of Nova Scotia over Royal Bank of Canada.
Mr. Sedran said he was positive on both banks after they reported strong quarterly results that beat Street expectations. But he now sees better earnings growth and total returns from Bank of Nova Scotia, providing its International Banking operations can regain momentum, which he predicts.
He also thinks Bank of Nova Scotia is trading at attractive forward price to earnings right now, with the price at a 4 per cent premium to his estimates for fiscal 2015 earnings, below an average premium of 8 per cent over the past 10 years.
"BNS has delivered strong results in its Canadian Banking and Wealth & Insurance segments over the past several quarters. International Banking numbers have been unquestionably soft, but we believe there are signs that the performance is beginning to gradually improve," Mr. Sedran said in a research note.
He adds that the sale of Scotiabank's stake in CI Financial will raise considerable cash that can be invested in the International business over time, adding long-term value.
Mr. Sedran upgraded Bank of Nova Scotia to "sector outperformer" from "sector performer" with a $76 (Canadian) price target, up from $73.
Royal Bank of Canada was downgraded to "sector performer" from "sector outperformer" with a price target of $81 (Canadian), down from $82.
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AltaCorp Capital Research analyst John Chu raised his price target on Vicwest Inc. in anticipation that it could become a takeover play.
IKO Enterprises and associated partners announced this week they have acquired a combined 11.3 per cent of Vicwest's outstanding shares. The shares were said to be acquired for investment purposes, but "IKO has shown a history of initiating meaningful equity stakes, which in some cases have turned into bids for the entire company," Mr. Chu said in a research note.
"We believe the IKO investment has likely set off a series of events that may have put VIC in play. As such, we have assigned a 40 per cent probability to this scenario, which results in a $11.25 probability weighted target, from $9.50 currently," Mr. Chu said.
IKO Enterprises is a Calgary-based manufacturer and supplier of roofing and structural waterproofing materials.
Mr. Chu maintains a "sector perform" rating, adding that "the IKO investment should provide underlying support to VIC's stock price going forward and will fuel speculation that VIC is in play."
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In other analyst actions:
Paradigm Capital cut its price target on Trevali Mining to $1.50 (Canadian) from $2.25 and reiterated a "buy" rating.
RBC Dominion Securities raised its target on Trimel Pharmaceuticals to $1.50 (Canadian) from $1 and reiterated an "outperform" rating Paradigm raised its target to $2.25 from $1.75 and maintained a "buy" rating.
BMO Nesbitt Burns resumed coverage on Encana with an "outperform" rating and $29 (U.S.) price target, up from $27.
M Partners hiked its price target on Input Capital to $5.10 (Canadian) from $3.10 and reiterated a "buy" rating.
Goldman Sachs raised its price target on Apple to $720 (U.S.) from $635 and maintained a "buy" rating.
Canaccord Genuity cut its price target on Splunk to $70 (U.S.) from $115 and reiterated a "buy" rating.
Darcy Keith